“Nic” he said, pausing just long enough to make me understand how serious he was. “I don’t think you realise. Our relationship with China is as bad now as I’ve ever seen it. Ever. You need to go back to the '70s when we were at war in Vietnam to understand the depth of this problem. It really is a huge concern.”

There is a freeze in the relationship. I’ve felt the cold wind myself. A small party of Australian journalists, including me, was scheduled to be in Beijing today with Bob Carr. Even his good relations didn’t assist our reception and so rather than bathing in northern hemisphere sunshine, we’re shivering in Canberra’s winter.

This dispute’s about much more than just the small aggravations: wine left waiting on the docks, study tours cancelled, and unexplained difficulties obtaining approvals for medical equipment. Something further, something particularly serious, is at work. A new friction is emerging, growing until it now risks a fundamental breach with our biggest, and most vital, trading partner.

How important? Australian exports to China last year were worth just over $110 billion (that’s 30 per cent of the total). Exports to the US, by comparison, were only worth $20.8 billion (5 per cent). We can’t walk away from this exchange without collapsing our way of life. China can.

China specialists insist that unless these issues are resolved quickly the danger is the dispute will escalate further. Defence and intelligence experts say we can’t back down. It’s increasingly looking as if politicians are seeking to harvest the issue for domestic advantage. This is much easier for a government hoping to harvest former One Nation votes than an opposition nervous about being branded as naïve, but it risks pulling dangerously close to the wind. In the meantime the ship of state lies wallowing in the waves, unable to tack one way or the other, seemingly becalmed and heading nowhere.

There are real dangers that the trajectory of our relationship could rapidly plummit on a downward spiral. If this happens, it could be almost impossible to pull out before a crash.

If the thesis is correct; if China is extending its influence here unconscionably and improperly, the key question is undoubtedly, what does Beijing hope to gain? What’s its real objective, and how should we protect ourselves?

Ironically, finding an answer to this question seems to be the biggest problem for those who are most concerned about the creeping extension of Chinese influence.

They’ll readily point out the possibility that foreign students on our campus’ may have been intimidated – while ignoring real instances of genuine threats against Australian citizens of Khmer origin. They point to the implied danger that accompanies the rapid development of Chinese cyber monitoring capacity – while dismissing the reality that Google, Facebook and Apple have already built huge databases containing the shopping habits, contacts, and political preferences of almost every Australian citizen. But there’s little or no evidence of any untoward activities – it’s mainly about ‘possibilities’.

They can’t explain why China’s such a major problem when similar concerns about information harvesting by massive US corporations is dismissed as irrelevant. In neither case has there been any misuse ... yet. Nevertheless, in both instances the danger is there. Facebook, for example, has demonstrated a willingness to sell its product to advance partisan political operatives, as witnessed by the Trump campaign in the US. Meanwhile, in the Philippines, Myanmar and Cambodia Facebook censors its news feeds according to government diktat, weeding out particular stories and articles.

Obviously special rules – and a new way of thinking – are required to deal with these issues.

Although cyber-security minister Angus Taylor is introducing vital new legislation to allow police (and spy agencies) to obtain warrants to monitor illegal activity, there’s absolutely no overarching framework in place to protect ordinary people. What’s needed is a clear and unambiguous statement of Australian interests in cyberspace that applies to both China and the US. There’s also a need for a clear statement, a marker, specifying where our interests end.

Liberal Senator Jim Molan, for example, is quite correct when he points out China has, in defiance of international law and its own promises, militarised the South China Sea. But, as he suggests, we probably now need to get over this. Beijing will never retreat. The key is to work out how best to move forward.

ANU Professor Hugh White's book – The China Choice – had great title. Unfortunately, and perhaps because of this, this idea has defined our relationship with Beijing. They pose the question of our future in stark and binary terms: Beijing or Washington; one or the other. Some of Labor’s thinkers are wondering if the time has now come to outline a third way: basing our foreign relationships around our own interests and ideals.

Australia’s always favoured multi-lateral institutions (like the United Nations) reinforced by the power of a hegemonic friendly power (first the British Empire, then the United States), but the old order has collapsed. Today Beijing possesses the biggest stake in our future. South-East Asian nations are engaging individually with China, forging the best deals they can. Beijing has no interest in negotiating group deals.

It’s built huge trading ties with us; we provide education services; and Chinese is now the second-largest language spoken in this country.

There’s no going back to the good old days. We need a new framework to survive a contested future.

Complicating this is the increasing number of Chinese residents now living here. Large numbers have settled in Liberal held electorates. In John Howard’s former seat of Bennelong, for example, these form by far the largest ethnic group and represent a decisive voting block. Local member John Alexander has carefully built ties with East Asians of all backgrounds, building good rapport amongst the community. This support that was vital ensuring his recent comfortable victory against Labor’s Kristina Keneally in a by-election last year.

The danger for the government is that if it continues playing the anti-China tune to serenade disaffected voters, it now risks alienating these vital votes.

Bringing the potential for interference to people’s attention is one thing; going in hard and making Chinese immigrants feel isolated because of Beijing’s actions may have a very different political result. Harsh language may work against asylum-seekers but have very different results with in Chinese Australian community.

The very fact that Chinese passport-holders have moved to Australia suggests they prefer our way of life. This doesn’t mean, however, they prefer Washington to Beijing.

The economic dangers are real, but much worse could still come. South Korea and Taiwan have both suffered real punishment when Beijing constricted investment and social ties. There’s been no drop in student numbers yet – but we won’t really have any idea about this until applications for the new academic year are received in a couple of months. In the meantime those dealing with the China trade are keeping their fingers crossed. They’re waiting this out.

The biggest problem remains. Neither the government or opposition have outlined, in an unemotional and honest way, on what basis they hope the relationship with China will continue. Let’s hope Beijing doesn’t re-define this to our detriment.